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Investors hate to wake up and find that one of their stocks has opened nearly 30% lower than the prior day's close. Unfortunately, that's exactly what happened on Tuesday for Neurocrine Biosciences (NASDAQ: NBIX) . The biopharmaceutical company announced bad news from a phase 2 study of experimental movement disorders drug NBI-98854. Here's what happened and what could be in store for Neurocrine now.

Dissecting the resultsNBI-98854 inhibits the vesicular monoamine transporter 2, or VMAT2, protein. The drug modulates the release of dopamine from the brain. Neurocrine thinks that inhibiting VMAT2 could reduce the affects of tardive dyskinesia, a disorder that involves involuntary body movements.

However, the company said that the 50 mg dose of NBI-98854 didn't meet the clinical study's primary endpoint of change-from-baseline in the Abnormal Involuntary Movement Scale, or AIMS, after six weeks. The AIMS assessment is designed to detect and track the severity of tardive dyskinesia.

This phase 2b study initially included 109 patients with tardive dyskinesia. Patients were initially separated into three groups -- one group taking placebo, a group taking a 50 mg dose of NBI-98854, and a third group taking a 100 mg dose of the drug. While the 50 mg dosage didn't show any statistical improvement compared to placebo, Neurocrine said that patients taking the 100 mg dose did experience meaningful reduction in symptoms in the second week of the study.

Based on these results, Neurocrine now plans to an additional phase 2 study using 100 mg and higher dose levels. The company had expected the 100 mg dose to be a maximum tolerated dose based on earlier results. However, this latest study showed that patients tolerated the higher dose relatively well. There were no serious drug-related adverse events, and the overall frequency and severity of adverse events was lower than expected.

The bigger pictureNeurocrine's stock got hit hard by this disappointing news. However, the results for the 100 mg dose at least give investors some hope that NBI-98854 could still achieve success.

The even better news for Neurocrine, though, is that it isn't relying solely on the VMAT2 inhibitor. The company has two studies under way for elagolix with partner AbbVie (NYSE: ABBV) .

One of those studies, targeting treatment of endometriosis pain, is in phase 3. AbbVie and Neurocrine expect to announce top-line results in the third quarter of 2014. The partners also have a phase 2 clinical trial in process with elagolix targeting treatment of uterine fibroids.

Elagolix -- which is a gonadotropin-releasing hormone, or GnRH, antagonist -- could offer several benefits compared to current GnRH agonists on the market. Agonist drugs such as AbbVie's Lupron and AstraZeneca's (NYSE: AZN) Zoladex must be injected, while elagolix is administered orally. These drugs typically take much longer to work than a GnRH antagonist like elagolix does. Worst of all, unlike GnRH antagonists, the agonist drugs can actually make conditions worse by causing a hormonal flare.

Some think that elagolix could reach peak annual sales approaching $1.5 billion if the drug is approved for both endemetriosis and uterine fibroids. It's always smart to take these peak sales projections with a grain of salt, but the drug does appear to have reasonable potential for commercial success if approved -- especially with AbbVie's sales force behind it.

The bottom line is that less-than-stellar results on NBI-98854 don't mean the end of the world for Neurocrine by a long stretch. A 30% plunge in the stock price could present a buying opportunity for investors comfortable with the inherent risks associated with small biotech companies.

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Keith began writing for the Fool in 2012 and focuses primarily on healthcare investing topics. His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries.